Posted
by
timothy
on Tuesday October 08, 2013 @12:11PM
from the why-you-can't-take-analysts-seriously dept.

dcblogs writes "Gartner says new technologies are decreasing jobs. In the industrial revolution — and revolutions since — there was an invigoration of jobs. For instance, assembly lines for cars led to a vast infrastructure that could support mass production giving rise to everything from car dealers to road building and utility expansion into new suburban areas. But the "digital industrial revolution" is not following the same path. "What we're seeing is a decline in the overall number of people required to do a job," said Daryl Plummer, a Gartner analyst at the research firm's Symposium ITxpo. Plummer points to a company like Kodak, which once employed 130,000, versus Instagram's 13. The analyst believes social unrest movements, similar to Occupy Wall Street, will emerge again by 2014 as the job creation problem deepens." Isn't "decline in the overall number of people required to do a job" precisely what assembly lines effect, even if some job categories as a result require fewer humans? We recently posted a contrary analysis arguing that the Luddites are wrong.

You're correct; that verb was used correctly, although the verb "effect" usually isn't. "I'm going to affect this car by hitting it with a hammer, and I'm going to effect a dent." Hitting it is affecting it, the dent is the effect.

If you said "I'm going to effect this car by hitting it with a hammer" you would be saying the car was the effect of the hammer's blow, which would be absurd.

Wal-Mart increasing their wages to $12/hr. would increase their average item price by 1.1% --- perhaps then their workers could occasionally afford to shop somewhere else, or eat out at somewhere other than McDonald's.

You can afford to pay $12 for a box of cereal. Be honest. You could do it.

Why don't you?

Labor is a market, just like any market. The work that unskilled people do in a non-skill-requiring job is worth a certain amount. That dollar amount is the intersection of [whatever a company is willing to pay] and [whatever those people are willing to work for].

You can start a company, pay people whatever you think is fair. That is your right.

So, you're saying wages shouldn't be set by market pressures, but by some Central Committee, perhaps according to a Five Year Plan? History suggests that you're ignorant of history, if that's what you're suggesting.

The problem here is that the "market" as it is for the wage-earners and the "market" as it is for the owners, is not the same thing at all.

As the simplest example, that is where every penny of the billions "made" in arbitrage comes from, the fact that one person's "market" is not another person's "market", and one or the other corresponds more closely to the abstract and unknown continually-emerging "market".

So, sure, as a multinational corporation you have vastly better fine-grained statistical and geograp

We call it "Congress", where we used to pass "laws" that made people middle class instead of insurance-free serfs. Left to the "free market's" mercy, most people would live in animal-skin tents and drink acidic rainwater. There ain't no such thing as a free market. Rich people shut down free markets for labor as fast as they can manage it.

The commies-are-coming crap should have died with the Birchers. Sadly, we consider Birchers liberal nowadays.

The only reason I get to decide how much I get payed is that I work in an industry with a real unemployment rate around 4%, I am lucky enough to have high quality skills, intelligence, and the work experience to show I am worth the investment.

Most people don't work in that kind of field, and most people have more or less average competence, and many of them lack experience that demonstrates their capabilities. I am lucky as hell to be able to act participate equally in the job market. Most people have no such luxury and are struggling just to make ends meet, accepting less than they are worth, and then working twice as much just hoping to hold on and keep their family off the street.

Employees are free to sell their labor elsewhere. They have the right to order their affairs and sell their time as they see fit, finding the most advantageous deal they can. The employer can decide if the labor provided is worth it. The employee can decide if the pay is worth it.

In some magic fairyland, maybe. But when you're on your 200th interview for a 20-percent-pay-cut job and prospects aren't so rosy, what then?

You need to either settle for what you're worth or endeavor (through school, training, etc) to make yourself worth more.

That's easy for someone like you or to say, who presumably make more than $60k per year. But the reason I make 6 figures isn't because I chose to make 6 figures, it's because I got lucky and happened to both have the interests and innate ability in said interests to command those kinds of wages.

The problem isn't that people are too lazy to make themselves worth more. The problem is that we don't need an entire population of Doctors, Developers and Stock Brokers. Some people due to their economic status as children didn't have the access or exposure to the necessary prequalifications for a high paying career. Some people are just too dumb. Some people are really good at things that don't pay very well. There are a lot of people out there who are really good at Basketball. I'm terrible at Basketball. But even the people who are really good at Basketball still probably aren't good enough to qualify for the minuscule job market for professional basketball players. And highschool PE teachers isn't a $60k a year job.

Meanwhile the total personal income for 2012 in the US was $13.4 Trillion. Total number of workers is about 154 million. If we had a purely distributed wealth economy where everyone got a cut of the pot we would each make:13.4T/154M = ~$86,500 per year.

But let's split that off too. Let's say professional degrees and middle management deserve more.

Let's take another $20k from the HS dropouts and $10k from the college grads.

Now:10% now make $196k.30% now make $106k50% now make $66k10% now make $46k

That's about what America would look like if we didn't let the free market assign you wage, we just gave everyone who stuck out college a guaranteed salary and every doctor/lawyer/masters/phd a guaranteed salary.

$25k would be almost half of the "base income" in that hypothetical scenario.

But let's address other libertarian anarcho-capitalist concerns. Without big buck potential nobody would start the next Microsoft. Personally I think a $200,000 salary would make a lot of people really happy since 99.5% of the population would see a HUGE pay increase. The number of people making six figure salaries would increase. The number of people buying cars would increase. The number of people upgrading their ipad every year would dramatically increase.

With 40% of the population suddenly making $100k a year if you did start the next Microsoft we could say you get stock. But have to pay a 60% dividend tax. You would still easily be a millionaire (or even billionaire) and the increase in customer purchase power would probably offset the 60% tax on dividends (plus you still make $200k a year) which should be enough to live off of. And unlike the status quo where bill gates can afford to risk his livelihood to start a company knowing his wealthy father will bail him out--more people will take risks and reach out hoping to maybe do a little better.

I see no reason any early teen that is willing to apply themselves could not do the same thing that I did and put forth a concentrated effort towards giving themselves a better future.

Yes, no reason why any particular early teen that is blah blah blah can't do the same thing.

But all of them? Lets say every one in the country were to take up your challenge. They'd all be above average earners?

Do you see the inherent basic math problem with that premise?

We need a solution that works for society, a solution that works for everyone. Not just someone in particular. Because a solution that elevates a few who try hard isn't really a solution, because if everyone tries hard then it doesn't work any more.

If everyone goes to school, and everyone busts their ass, and everyone applies themselves, then at the end of the tunnel... the pyramid of available jobs still needs to be filled, and the pyramid has a very large base.

If everyone does what you did, then some of them are still going to be stocking shelves at walmart and serving coffee at starbucks.

So we need to just accept that, and design an economy where we can compete with our peers to better our position in a job 'market' while at the same time ensuring that the bottom end of it is still pretty livable, since nobody how hard everyone tries an awful lot of us are going to be living there.

If a CEO gets the owner one million dollars per day, the owner can afford to pay that CEO $999,999 per day and still pocket $1 a day. It's not your business. The owner can decide if the CEO is worth it. The CEO can decide if the pay is worth it.

Employees are free to sell their labor elsewhere. They have the right to order their affairs and sell their time as they see fit, finding the most advantageous deal they can. The employer can decide if the labor provided is worth it. The employee can decide if the pay is worth it.

Uh oh. I see the problem. Where does the 3rd party fit in? Some other person, like a government bureaucrat, intellectual elitist who doesn't actually do work for money, or politician pandering for popular votes... where can that person inject their bullshit in this scenario. A problem indeed!

What happens when the majority of economic activity requires no workers at all? Then the owner gets a pile of profits, pays no workers at all, and only owners can afford anything because everyone else is unemployed and unemployable...

Capitalism is inherently flawed just like any other economic system. The underlying set of assumptions for capitalism has been reasonable so far, but it will not remain so. Capitalism will fail for the same reason that communism fell. Both systems make fundamental assumptions about the nature of economy, and both sets of assumptions are not always true.

What happens when the majority of economic activity requires no workers at all? Then the owner gets a pile of profits, pays no workers at all, and only owners can afford anything because everyone else is unemployed and unemployable...

So, who is the Owner selling things to to make that "pile of profits", if there are no customers because they're "unemployed and unemployable"?

What happens when the majority of economic activity requires no workers at all? Then the owner gets a pile of profits, pays no workers at all, and only owners can afford anything because everyone else is unemployed and unemployable...

So, who is the Owner selling things to to make that "pile of profits", if there are no customers because they're "unemployed and unemployable"?

Other owners. The fact that 99% of the population doesn't have money doesn't mean that nobody has money.

What happens when the majority of economic activity requires no workers at all? Then the owner gets a pile of profits, pays no workers at all, and only owners can afford anything because everyone else is unemployed and unemployable...

It's worse than that. The owner's profits are 100% dependent on customers, and over time everyone has fewer customers. So before long, you have a few people with huge automated factories only producing one or two items a year for the other factory owners and everyone else is kept outside the fences by robots armed with blinding lasers.

Sometimes you'll hear people talking about "the redistribution of wealth" like it's a bad thing, but in truth all economic systems are methods of wealth re-distribution. Ours

But Capitalism has been proven to lift millions of people out of poverty. I question what school you went to that didn't teach this plain fact.

Communism fell because it took people who were poor and made them even poorer. Quite an accomplishment, if you look at the historical circumstances. Go ahead, try to figure out a way to take a peasant whose entire worldly assets are a goat, a cow, and a couple of chickens even worse off. No, seriously. Communism figured out that problem and applied it to hundreds of millions of humans just like you.

I am genuinely curious, do you really believe this? That the worker bees are free to just go elsewhere to make more money?Just look into US history for labor violation. Think company store.It is simply a fact of life, many of those with power will take advantage of those without power. It is Human nature.If you want to have a functioning, peaceful society, then yes, you really need to regulate things like labor laws.

Remember this. MOST people in the US live pay check to pay check. They CANNOT quit their job. If they lose even a week of pay, that is is the difference between eating or rent.I am lucky. I don't really need to worry about these things, but it wasn't always the case. And back then, it was scary. Having lived it, I firmly believe we need regulate these things.Of course, a big part of the problem is inflation. There is no real reason things need to get more and more expensive.

That's not what it means. You fail. It means that you do not have savings upon which you can live while you regroup if your paycheck is terminated. Everyone else on the planet understands what this means, so you're not fooling anyone.

Employees are free to sell their labor elsewhere. They have the right to order their affairs and sell their time as they see fit, finding the most advantageous deal they can. The employer can decide if the labor provided is worth it. The employee can decide if the pay is worth it.

Not only that, but consumers are free to not buy products at prices that ultimately lead to their own lowered wages.

That's the second time you've used this. Maybe you believe it's true. Simple fact is, if you bother to look at the jobs market for openings available to the people who for whatever reason or circumstance are fit for nothing more than a job at Walmart and the like, _there is no labor market_. There is no fine a la carte menu for jobs. There is a mad scramble to get something, anything, to pay the simplest of bills. There is only a very limited number of

You can start a company, pay people whatever you think is fair. That is your right.

For someone with the username containing 'gandhi' you show a surprising lack of concern for civil rights.

The very central premise of capitalism is that in most cases *you can't start a business*. Technically of course you have the freedom to, and if you're in the right place with the right new idea you could do quite well, but capitalism thrives off economies of scale, and economies of scale mean that your little business is at a huge disadvantage to the incumbents. At some point we need a cut-off to prevent people from being abused.

In capitalism (following the ideas of Adam Smith and David Ricardo), you build your advantage where you have a competitive advantage. That's why we still have things like microbreweries and corner liquor stores.

And it's exactly the same thing why we still have things like Wal-Mart: their competitive advantage is that their size allows them to profit from economies of scale.

Except in areas where protectionist zoning doesn't permit them to operate at all. And it's in fact reasonable to do this, with regard to Walmarts, whose major business model is to open a store in an area, lower prices to the point everyone else is run out of business from their inability to compete on economies of scale, and then raises prices.

This is why almost all the Walmarts in the bay area, except the one in San Jose, are in the East Bay, and not on the peninsula (and you could argue about the one in

Labor is a market, just like any market. The work that unskilled people do in a non-skill-requiring job is worth a certain amount. That dollar amount is the intersection of [whatever a company is willing to pay] and [whatever those people are willing to work for].

You can start a company, pay people whatever you think is fair. That is your right.

What about the unacknowledged subsidy to the employer? They pay unlivable wages and brush off the cost of that (their savings from paying lower wages) onto society when said employees need to get healthcare and food assistance.

Classic economic growth theory was that technological advancements would come in and increase the marginal productivity of capital beyond that of labor and drive a shift towards skilled capital-intensive labor, and away from the cheap unskilled mass labor jobs.

Ultimately, though the unskilled laborers suffer from unemployment in the near term, in the long term, they can find new jobs created to support the more capital-intensive industry and end up better off than if they kept their unskilled jobs.

Because labor is subject to the same fundamental laws of supply and demand as any other resource. The pool of unskilled labor has a whole lot of supply.

Even more fun, if labor is, in fact, subject to the fundamental laws of supply and demand, it should (in a free market environment) achieve an equilibrium price equal to its marginal cost of production. Good thing that subsistence-level existence isn't horrible or anything.

And, none of this exclusively applies to the unskilled (though, obviously, the marginal cost of production of a college-educated worker is a lot higher, so such workers must earn more in absolute terms in order for their price to be eq

. Good thing that subsistence-level existence isn't horrible or anything.

If you have a job in America (or two, for 60 hours a week of technically-not-full-time work, like I and everyone I knew worked in our 20s) you live better that 95% of people who have ever lived. Check out parts of the world where "subsistence living" still actually happens and adjust to reality.

The simple fact is, people want to be paid a bit better than their neighbors, and don't really compare their standard of living to most of history, or most of the world.

I don't care what economic system you embrace, you will never achieve a result of each person making a little bit more than average. Real life doesn't give "participation trophies", sorry about that.

"if labor is, in fact, subject to the fundamental laws of supply and demand, it should (in a free market environment) achieve an equilibrium price equal to its marginal cost of production"

Did you notice the two (big) conditions I started out with? If labor is not in fact subject to these 'fundamental laws' in the way that commodities are, or it is not priced in a free market environment, or both, then it may well achieve some other equilibrium price.

Wal-Mart increasing their wages to $12/hr. would increase their average item price by 1.1%

Walmart's profit margin is 3.61% [yahoo.com]. So 1.1% would be about 30% of their earnings. If they could increase earnings by "just raising prices", they would have already done so.

If Walmart increased their wages to $12/hour, that would not help their current workers, because for $12/hour they would hire different people. My local Walmart has two employees in wheelchairs, and another employee that obviously has Down's Syndrome. You won't likely see either in shops that pay higher wages. Walmart hires people on the bottom rung, that would likely otherwise be unemployed.

Those people are likely not paid a normal wage. One of the scams surrounding the disabled is to calculate what you should pay them vs another employee by having a ringer perform a task then letting them do it. You can then say since your ringer can do X operations in Y time and it takes this worker 5 times as long you can pay them 1/5th as much. Even if they are only really performing half as much work as your normal employee.

OK, you win the Specious Award for today. Wal-Mart hires people on the bottom rung because they can get away with paying them the least. By concentrating on price, only on price, coupled with astronomical volumes, and their arm-twisting style, Wal-Mart has started the whole world on the race to the bottom. It's not just the jobs of the local store employees, it's also all the jobs of all of Wal-Mart's SUPPLIERS. They've driven down the labor costs (read wages) of everyone in their supply chain. Only suppliers large enough, and willing to be every bit as evil are able to supply their voracious needs. They've driven every mom-and-pop store in every town out of business. That's an awful lot of accountants and shelf-stockers and cashiers and managers spread out over a lot of small stores who are "redundant" at a large regional Wal-Mart. Now they're trying to do it to all the grocery stores.

Most of the employees in the mom and pop stores are able to get jobs at Wal-Mart. Wal-Mart also provides many jobs, particularly in IT, that simply don't exist in mom and pop shops.

So you can't do simple arithmetic? A single Wal-Mart drives dozens of stores out of business and you think that all those employees get (lower paying) jobs at Wal-Mart? And a few thousand IT employees nationwide somehow balances that?

The "enormous opportunities for increases in productivity and efficiency" you're talking about actually DECREASE the number of jobs available, and make the remaining (or newly "created" (i.e. refactored)) both lower-skilled and lower-payed.

Welfare state? Really? The only place in the US that a "welfare state" exists is in the fantasy Faux News alternate reality echo chamber. Anybody who even uses the term is living in delusion. You and I BOTH know that corporate and personal taxes are MUCH lower than in the 50s and 60s and that the overall economy is demonstrably worse since they have gone down. FACT: higher corporate taxes leads to reinvestment in the company, which leads to an expanding economy. Lower corporate taxes leads to wealth hoarding, which leads to a shrinking economy.

In short, you're an idiot who needs to stop drinking Rush Limbaugh's Kool-Aid.

So you are assuming the only costs Walmart has are from store labour? You know there are other aspects of the business don't you? Like rent, utilities, management, and that is just at store level. Then there is how many thousands they have to pay at head office in Arkansas. Then there are things like warehouses and distribution costs, and the cost of the goods they buy from CHINA. And I am sure there is a lot of other stuff that I am missing. Use your freakin' head, labour doesn't come out of profit, profit comes after ALL those other things, including labour, are taken into account against income earned.

Look, I have nothing against the argument that if you have no skills and never tried to get any (including dropping out of school), you shouldn't complain too much about low wages. On the other hand, if you never were given or never had the opportunity because of circumstances, well then I have some sympathy... not everyone's life is easy. But please don't shoot shit like that out your ass and ask us to believe it reflects reality.

You need to differentiate between those who cannot pay more and those who will not pay more due to the greed of the owners. Many companies such as mine are in price sensitive industries and paying significantly higher wages results in the company's products becoming uncompetitive. My company manufactures wire harness products and our competition is often in places like China or Mexico with much lower wages or are much larger companies who are able to automate to save money. We simply cannot pay more than we do and remain in business.

Wal-Mart increasing their wages to $12/hr. would increase their average item price by 1.1%

Let's presume for a moment that your numbers are accurate. What you are forgetting is the the loss of sales from that 1.1% increase in item price. Walmart has built their entire business on being the low price leader but their lead is not very big. Walmart's net profit margin is about 3.5% so there isn't a huge amount of room to increase costs. They only keep their price leadership by a ruthless focus on keeping costs low. An increase in prices of 1.1% would result in a significant loss of sales. How big? A little hard to say without some pretty serious analysis but it could *easily* be more than 1.1%.

I don't actually have a disagreement that Walmart should pay their employees better if they are able to do so but it is not nearly as simple as you make it sound. There are more stakeholders in the company than just the employees and there are serious consequences to across the board pay increases.

Here is the problem I see it.1. Automation has reduced the need for unskilled labor.2. Lower Education K-12 is designed to produce people who is able to perform unskilled labor effectively3. Higher Education is designed to produce people who will go into research, and education for education purposes.4. Due to having an economic advantage of not being bombed to hell in WWII the US had little economic competition for 50 years, now these countries have been rebuilt with a more modern infrastructure. But we had a few generation who had a higher quality of life that is now unsustainable, and we don't have an infrastructure to make lower quality of life better. (Public Transportation, Safe Low income housing...) So the $10.00 an hour worker would have a living wage. They may not have a Car or an X-Box but a safe roof over their head and able to raise a family in safety.

We need to fix lower education, and raise up the prestige of Vocational Training. So we are not unskilled labor, or college grads with no practical skills. The job of tomorrow need people who can be versatile and think on their feet, and adapt quickly to changes. We need to teach these skills.

We need to redesign residential areas where the Rich and the Poor live together and we have an infrastructure to allow people to work.

I agree with the general thrust of the article, but comparing Kodak to Instagram is straight-up retarded. Instagram is not replacing Kodak. It does not do what Kodak used to do with only 13 people. It does almost nothing, and does nothing worthwhile.

Anyway, it matters not how many new jobs are made, when the people whose jobs disappeared don't qualify for them. I highly doubt displaced, former foundry workers, who spent the last 30 years mastering the art of steel production, would give a flying fuck that Samsung opened a new facility where they used to work and is now hiring software engineers.

I highly doubt displaced, former foundry workers, who spent the last 30 years mastering the art of steel production, would give a flying fuck that Samsung opened a new facility where they used to work and is now hiring software engineers.

Amusingly, I used to work in a foundry and I'm currently a software developer. (Employer keeps trying to call me an engineer, but I call it alchemy.)

I think you over estimate the time or skill required to master steel production. You could have a high-schooler trained to do it inside a year.

Such a shame that the American people allow the university (and medical) systems to hold them hostage instead of allowing the whole country to move into the 20th century.

Not only is it an extremely bad comparison but it's absurdly shallow in estimating jobs. Instagram is generating countless jobs by creating a new market niche to be filled.

Um, uploading photos to an online database is hardly a "new market niche."

Now, let's talk about those "countless jobs:"

- New cell phones to make uploading to instagram easier and faster

Made in China, on the same assembly line, by the same people who are making the phones on the market today. Ergo, no new jobs, and even if there were, they wouldn't benefit a single unemployed American.

- New cameras to support communication with cell phones

Also made in China, Also on the same lines by the same people as made cameras previously. Again, no benefit to unemployed Americans.

This is a really difficult thing to predict, and either prediction could be true. With the industrial revolution there was a net increase in demand for jobs since the increased efficiency resulted in higher demand in general thus increased infrastructure requirements. Part of what made this possible was, even if you decrease the cost, manufacturing still required time, energy, materials, etc.

Something that makes tech a little different, esp when it comes to software, is the near zero cost of reproduction. If industrial revolution Ford got double the orders for cars it would not only require more assembly lines but part suppliers would need to ramp up as would production of raw materials. If Microsoft's demand for MSOffice doubles, they might need a bit more bandwidth but there is no real spiderweb of increased jobs. They just allow more downloads or print more copies.

The industrial revolution DID cause unrest. Only an idiot would think that wasn't the case. A whole body of famous literature is about said unrest, that people I would suspect are aware of even if not history in general. The Labor movement was an expression of unrest, as was the communist revolution.

It didn't take long for it to improve things overall, and not many sane people want to go back to a pre-industrial world, but to pretend it didn't cause job loss and unrest before job gain and improvement is absurd. I think that's what both the Luddites and the Futurists get wrong, there will be pain, there will be suffering, then there will be benefit. Markets take time to adjust, and attempts to short-circuit that adjustment time have historically gone terribly wrong (e.g. great leap forward).

Just because you're 7 years from retirement and nobody wants to take you on doesn't mean that you shouldn't spend what's left of your life savings after the 2008 crisis to go to college and start anew as a Silverlight monkey!

I suppose Gartner would have a coronary if he was around when the forklift came into being. I wonder if he hires a personal truck to pickup his latest reading material from the publisher, rather than letting the paper see the inside of a jobs killing train car?

The same way we no longer need to hunt and gather in today's society, most of us will no longer need to work in the future in order to keep goods and services being produced. The question is, how easy or difficult can we make this transition? To me , the worst thing that can be done is simply ignoring the problem and erroneously pointing fingers to the Luddite movement as a perpetual example why this would never happen.

I hereby sentence everyone to "Economics in One Lesson", by Henry Hazlitt.

New technology and new production efficiencies certainly displace people who were tied to the old technologies and methods. Most people don't think too highly of the folks behind Standard Oil, but an honest assessment would suggest that they did more to save whales than anyone at Greenpeace -- by making whale oil a less cost effective heating mechanism.

This naturally caused a huge job loss for the whaling industry -- which at the time was of course a great social woe.

Whalers, buggy whip manufacturers, and people whos jobs can be trivially replaced by robots are all going to be displaced when technology improves.

What bad economics (and policy makers) repeatedly do, and what is covered in Hazlitt's book, is they focus on what is seen and ignore what is unseen.

What is easy to see when a buggy whip manufacturer loses their job is that Bob lost a job.

What is harder to see is that nearly everyone else in the society is some fractional percent wealthier. The automobile saved people time, which is why it replaced the horse. People who spend less time unproductively can create additional wealth for the rest of society to benefit from.

I think most people agree that a world where we all have handheld supercomputers that can take photos is a better world than one where the instant camera is the only cost-effective consumer device for seeing a photograph within 1 hour of having shot it.

What this analysis fails to "See" is beyond the 13 jobs at instagram. It's easy to see the loss of jobs at Kodak or polaroid. But add up all of the jobs that are tangentially related to digital photography. Flickr? People working on DSLRs? People working on Photoshop? People who write a 99 cent appstore app that is a filter for your iphone's camera?

Cast a wide net to "see" what bad economists aren't seeing.

The thing about these luddite arguments that really shows they don't hold water is that if the old way was really better, we'd go back.

We, in aggregate, like the new way better -- which is why we aren't giving up our smartphones and rushing out to buy film cameras.

"The automobile saved people time, which is why it replaced the horse."

It also saved Manhattan from being -- quite literally -- buried in horse shit.

"Most people don't think too highly of the folks behind Standard Oil, but an honest assessment would suggest that they did more to save whales than anyone at Greenpeace -- by making whale oil a less cost effective heating mechanism."

Strangers with this kind of intellectual honesty make me go a big rubbery one, if you know what I mean.

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

One thing I recall vividly from my college macroeconomics course was the phrase "ceteris paribus" - all things being equal. While many economic theories are logically sound "ceteris paribus" the real world is not and never will be "ceteris paribus". In the real world jobless, poverty stricken, hopeless people do not disappear into the ether once they drop off a ledger. They do whatever animal instinct it takes to survive: they commit crimes, they revolt, they support any cockamamie cause that gives them the illusion of survival or restoration of better times. Does anyone really want to repeat the mistakes of the first half of the last century where debt, specifically war debt, plunged the planet into economic depression and chaos resulting in global world war? Economic policy should be set in a holistic fashion concerned with the long term interests of all participants, not just those the current market deems leaders.

Also remember economists are by no means immune from the same market forces that they study. How many economists are so devoted to their science that they would be willing to betray the the immediate interests of the their employer, typically governments or large corporate entities, if the science dictated it?

We're not talking about an evolutionary change in industrial production. Yes, buggy whip makers were going to go out of business. Fine, so those guys have to find different jobs. I hear the car factory's hiring. A little retraining, maybe a year of school / vo-tech, and he (no women in the workplace) would be back in a middle class job.

That's not the case here. The destruction part of your argument remains valid. Do we need lawyers to draft, say, formative corporate documents? Never did, frankly, but

Again, I don't think this is fundamentally new. The rate of innovation (and thus stagnancy) is perhaps faster than at other times -- but is that even true? And the ingress into "white collar" jobs might be higher than at other times --- but is that true also?

The assumptions that a lawyer makes about his career (long career, monotonically increasing salary, retire at age blah) may become invalid. But those assumptions have always been assumptions, and situational. Sports players can't use those assumptio

If we are to continue to have a peaceful society then a social wage will become necessary, but that is up to the people who have power...which they get from controlling wealth...which they get by optimizing people out of the labor force... Yeah it will probably end up with social and economic destruction before we can rise out of the ashes and progress again.

Gartner, Forrester, etc. are the bane of my existence in IT, because they promote magical thinking among executives, but this time they're right about something.

No one is prepared to deal with the dirty little secret of the information age -- that there are going to be huge swaths of the population who will be out of work, with no prospects for future employment. The last time around, it was low-skilled factory workers. Now it's the middle class's turn! And when half the country has no money and no work, they're going to get angry.

I don't think the current generation of office workers is really thinking about how much less of them will be needed once companies get around to squeezing every single nickel out of every single business process. It's already happening on a huge scale, even in the IT sector. Anything rules-based is basically fair game for automation. Think back a couple of decades -- how many millions of bookkeepers, accountants, secretaries, low-level report-consolidation managers, etc. did large companies employ and pay a decent middle class salary to? Each one of those went out and bought those large companies' products, bought houses, cars and vacations. Now that strong base of consumers is disappearing, or they need to finance their purchases through debt because their wages don't keep up. Large numbers of corporate jobs can still be summed up as "I look at reports from this location, perform a few calculations and summarize the resulting numbers for my management by emailing them a spreadsheet." No one can tell me that the accountants haven't noticed this...

The vast majority of people in the middle class, in my opinion, are averse to social welfare policies simply because they don't think anything bad is ever going to happen to them. Worse, they think that if they support the richest people and just try really hard, they'll eventually be rich themselves. This thinking is going to backfire hard on them when their nice safe job is automated or no longer needed. For example, the most vocal opinions of the new healthcare law in the US are typically middle class families who get their insurance coverage through work and have never had to worry about not having it. Try explaining to them that there are a significant number of working individuals who can't afford insurance and you get, "But...but...socialism!!" All I can say is the next few years will be very interesting. If you believe the Star Trek TNG writers, it's going to take a massive upheaval to get to a post-scarcity utopia.

Who needs 'post-scarcity utopia' when you can huddle behind the razor wire that surrounds your gated enclave and watch the battle between the barbarous criminal scum living in filth in the sacrifice zones and SecuriDyne kinetic pacification drones in real time, HD, 24/7 on the fear channel?

I remember a long time ago when I was young that some people were predicting a future where due to technology advances you only had to work a small number of hours to meet your basic needs. People were worried about what we would do with all that leisure time.Of course, this was naive and while it is true that technology advances have made it possible to produce much more with less labor, all of the productivity gains have been captured by the corporations and the 1%.We now have a situation where there is a surplus of capital controlled by the rich 1% and corporations and also a surplus of workers due to gains in productivity. Unfortunately, this leads to low wages and not enough jobs. Poverty and social unrest are the result.One would think that different approach to society would correct these imbalances by first raising the pay for work which would allow people to work fewer hours and create more jobs. Also, the idle capital of the rich and corporations could be harnessed (taxed) to improve infrastructure and social services.We could have a utopia if the capitalists weren't so firmly in control of our government. Instead we have a dystopia with poverty, disease and social unrest... perhaps that could lead to a better government but it will be messy and the outcome is far from certain.

Gartner says new technologies are decreasing jobs. In the industrial revolution â" and revolutions since â" there was an invigoration of jobs.

So, the guy didn't learn from the Industrial Revolution (and revolutions since) that all the fear of 'no more jobs for anyone' ended up being unfounded?

New technologies don't decrease the number of available jobs; wealth sequestration among the super-rich does. With the Middle Class having less and less money to spend, the demand for products -- and the jobs required to create them -- goes down. We've been seeing this over the past thirty years, which just happens to coincide with the rise of the computing industry.

The fear now seems to be that the new jobs are not as people-intensive and won't be able to absorb the unemployed population. (A different fear is that the jobs that do get created will get created somewhere with cheaper labor, because the new jobs created by the internet and web are indifferent to physical location... which is the whole point of the internet and web, after all.)
I think there will always be something for people to do, but I think it's quite possible that for a lot of people it's going to wind up being "come up with something that you think other folks will like enough to buy and see if you're right". It seems like a logical progression from both the "you're responsible for all your own issues (retirement, health care) that your employer used to hire folks to handle for you" and from the etsy/kickstarter/indie musician directions. The problem with that, of course, is that most of the folks trying that are going to fail...

So, the guy didn't learn from the Industrial Revolution (and revolutions since) that all the fear of 'no more jobs for anyone' ended up being unfounded?

This happens every time something new comes in. Yes: it does cause some people to loose their jobs as what they do can be done more cheaply by new tech, but it creates more jobs elsewhere. Remember the Luddites [wikipedia.org] who went around smashing up the new mill machine. They wore clogs as shoes and stuffed them into the machines (which is why we say things are 'clogged up') and gave rise to the word 'sabotage' ('sabot' is the French word for 'clog').

So, the guy didn't learn from the Industrial Revolution (and revolutions since) that all the fear of 'no more jobs for anyone' ended up being unfounded?

That is unless you were a horse. I don't see all that many horses employed any more, there are still a tiny few jobs left for horses, but for most part the talents that a horse provided has been completely replaced with machines, leaving the horse job less. With humans it's going to take a little longer till all our talents can be replaced by machines, but I don't see any reason to assume that won't happen and that we will end up just as jobless as the horses.

Isn't "decline in the overall number of people required to do a job" precisely what assembly lines effect, even if some job categories as a result require fewer humans? We recently posted a contrary analysis arguing that the Luddites are wrong.

The end result is a big gaping hole in employment, and unless new industries come along, there's nothing else for these people to do.

We're already seeing this, and if there is no new employment sectors, all that's left in your economy is part time jobs and other shit jobs. Unemployment numbers go down more because people give up looking than because jobs are getting created to offset those who get 'right sized'.

Is this the direction you want your country to go in? Because this is where we're heading -- the shareholders are happy (for a while), but you no longer have anybody to buy your product (and then your sales slump and the shareholders are unhappy).

Welcome to the future, where short-term shareholder value will destroy your economy in the long run.

If this were actually true we would have seen a steady increase in the number of unemployed people over time during the past 20 years. Instead we had near record low unemployment until around 2008 when we had a banking (not technology) related financial crisis. Since then unemployment has been slowly but steadily falling back towards what passes for steady state norms. While it is true that people are not employed at the same companies they used to be, technology takes away some jobs and adds others. It also makes people more effective at the jobs they do.

But the "digital industrial revolution" is not following the same path. "What we're seeing is a decline in the overall number of people required to do a job,"

That's the entire point. It means you can get more done with the same number of people. It's called increasing productivity. Rather than having a room full of accountants entering journal entries by hand on a paper ledger we have one accountant keeping the books in some software and everyone else does something more productive. Instead of using switchboard operators we use computers to route calls. There is ZERO evidence that digital technology is eliminating jobs without replacing them with others. The number of jobs hasn't fallen due to technology but the skillsets required to fill them has changed.

Plummer points to a company like Kodak, which once employed 130,000, versus Instagram's 13.

I'm not sure they could come up with a more ridiculous example. Instagram is an add on feature to already existing social networks for sharing pictures. Kodak actually made critical parts of picture taking equipment. If you want to compare Kodak to something modern, compare them with CCD sensor manufacturers and camera makers which I assure you employ far more than 13 people.

Since then unemployment has been slowly but steadily falling back towards what passes for steady state norms.

Mainly because in the US "unemployed" is a rather narrow segment of those not working. In 2007 there were 7.0 million unemployed (4.6%) and 4.7 million outside the labor force who wanted a job, in 2013 there is now 11.3 million unemployed (7.3%) and 6.5 million outside the labor force who want a job. In other words apart from the demographic changes of a aging population about 1.8 million have left the labor force so they don't get counted towards the unemployment statistics. The employment-population ratio

If this were actually true we would have seen a steady increase in the number of unemployed people over time during the past 20 years. Instead we had near record low unemployment until around 2008 when we had a banking (not technology) related financial crisis.

During the Clinton administration, the average annual increase in jobs created was over 2.5% per year. Since 2000, that figure dropped to 0% and 0.21% during GWB's two terms. Obama's first term was also 0.21%. Population growth has been outpacing job creation for a while now, and youth unemployment in the US is around 17% and still rising.

Not only that, but Labour participation in the US has been steadily dropping since about 2000, from 67.5% to around 64%, with no signs of a reversal.

Underemployment has also been gradually increasing prior to 2008, and standing at about 17% today. Consumer debt levels are still standing at over 80%, up from 45% in 1980, suggesting that the jobs that are available are not sufficiently well paid, and are not keeping up with the cost of living.

These are not the indicators of a healthy labour market. Indeed, while unemployment is dropping slightly it is still roughly double pre 2008 levels, despite economic growth in the US.

An interesting thing to note is that not everyone employed is being paid. Being in a training scheme doesn't count to the unemployment list, nor being in education. Here in the UK, it's suggested that falling unemployment is mainly the result of government social security programs dumping people into either training or no income self employment, massaging the figures. The US might well be similar.

For me, the hypothesis that automation and technology are lowering job creation and wages is pretty sound.

In western societies where our economic growth is based around consumption of goods and services, what are we going to use to fuel growth when employment and wages drop even further? Are we just going to discard the unemployed we already have?

On the Internet, people often moan about how Western countries "don't make anything any more." The idea being that our service economy is built on a house of cards and the only true economic generator is the making and selling of stuff.

My view is that manufacturing is a bad choice of focus for our economies. The direction of travel is clear: it is very clearly a race to an ever descending race to the bottom which will end with completely automated factories. This race started with the industrial revolution and it will accelerate during our life times. The jobs are slowly but surely being eliminated and it might even have happened sooner if China hadn't been able to provide so much cheap labour. Those jobs are simply not safe in the long term.

But even the Chinese are not safe. Eventually, they'll all be replaced by machines and when they are, it won't matter where those machines are located. The machines will re-locate closer to the consumers to shorten supply lines.

The message is stark: any job that is repetitive risks being replaced by a robot.

Perhaps the most interesting of these is automated driving. It promises to completely transform our world. It will transform logistics in much the same way as containerisation did to shipping. It will transform everything but just think of the number of jobs that will be eliminated!

Then there are threats like 3D printers which threaten to completely remake the world as we know it.

The only sensible way to weather the next 100 years is through developing products and service that can not be automated. These are things like law, software development, media etc. etc.

Producing stuff is quickly becoming unprofitable. Service economies are our only hope.

Who also predicted (in 2011) that Windows Phones would capture 20% of the mobile market in 2015??? Yep. In fact, they are the same outfit that predicted (in 2010) that Symbian would have 30% in 2014. So, I make it a rule not to get worked up about their predictions...

The key difference between this and previous technological revolutions is that many people will simply be replaced; whereas in previous revolutions the people's efforts were amplified. A great example would be farm technologies. A zillion years ago in the dawn of agriculture people used a stick to shove the earth around, which became an ox pulled plow, then a horse, then crappy tractors, and now huge combines. But at each point there was a person doing the plowing. But the final move will be a robot doing the plowing. In theory there will be someone to hit the plow with a hammer when it jambs but this will be a tiny number of people nationwide.

The other critical factor is that the guy who runs the combine isn't that much more skilled than the guy with the stick (In that it wasn't years of education) which will be typical of the job killed by various forms of automation. This means that it is not so much that fewer people can do more it is that a greater percentage of the population will be unable to work productively in that a robot will be the better option. If you talk to many people who earned a good living over the last 60 years with little education you will find that they worked in very few industries, mining, farming, fishing, and manufacturing. All these are becoming more and more automated. Personally I am surprised that mining isn't completely automated underground in that by eliminating the human factor a mine should become really cheap if you don't have to worry about keeping humans alive. Plus many mines are in bizarrely remote areas meaning that you not only have to keep the miners alive underground but you then have to build whole communities above ground including expensive things such as hospitals.

One thing that I worry about is not just this clear problem of the low skilled becoming generationally unemployed but that some cultures and governments are not biased toward solving this problem. Personally I think the solution will be a consumer focused socialism. My main worry is that some countries will punish the poor, reward the few extremely productive producers and end up in modern feudal system with freakish inequality becoming the norm.

Other countries I believe are well culturally disposed at aggressively making sure that the maximum number of humans benefit from the near utopian bounty that could be provided by this revolution.

The digital revolution has created jobs, including mine. Most places I've worked 20% of the workforce had jobs directly due to digital revolution. crank up the digital revolution to 11, we need more jobs. information is just like any other resource, creating it can create wealth, processing it can add value to that wealth, and it can be traded and sold at a profit.

Reducing the amount of work it takes to keep the human race alive, fed, and housed should be unambiguously good. The reason it's not is because we've structured our society around the idea that all adults must be employed in full-time jobs (or be married to someone who is) to qualify for a decent life. We have this idea, particularly in America, that (employment) work is a virtue in and of itself. Unemployed people are shamed and villainized.

If we all lived on isolated family farms, it would be obvious that reducing the total workload is better for everyone -- less work = more free time. But instead, we live in a complex, interconnected industrial society. It's going to take a lot of large cultural changes before we can handle the idea that some people might not work at all, or only work a few hours a week. For perspective, we still don't have a consensus on whether something as difficult and time-consuming as being a stay-at-home mom counts as a job.

Why does anybody on slashdot care what Gartner says?
They are the National Enquirer of IT, mainly trying to sell useless advice to people who cannot think for themselves.

Newflash: Motor vehicles put buggy whip manufacturers out of business. And they also created a huge number of jobs in drilling for oil, refining gasoline, building roads and they even require mechanics.
Maybe we won't need store clerks any more but we will need somebody doing something new and unanticipated at this time. Gartner Group can never sell that to its customers (which is completely different from saying they don't understand the future). It's easier to sell fear than hope mostly because fearful people will buy anything that looks like a solution whereas hopeful people aren't in the market for solutions. (Be very clear about what sorts of folks Obama was selling his Hope message to in 2008).

IBM still makes mainframes. No matter how many tablets and smartphones are sold, Dell or Lenovo or somebody will still be able to make money selling laptops. Oh, and I can still buy both buggies and buggy whips at my local equestrian store, both of them made lovingly by hand.

That comparison isn't even tenuous. Instagram hasn't taken over for Kodak with 13 people. Kodak created products. Instagram simply leverages other companies products to provide a service. Instagram is more like one of those photo-mats that existed in parking lots in the 70's. The photo-mat employed a handful of minimum wage people to work with kodak's products. Those photo-mats also all went belly up long before even digital cameras started to come around.

Compared to the photo-mat, Instagram employs a handful of significantly better paid people to work with apple and googles products. The apples and the googles are a better comparison to Kodak. Last time i checked, apple and google employed a fair number of people.

AFAIK, in Kodak's heyday, there were 13 unemployed instagram people waiting for the digital revolution.

I posted about this before in another thread, but the scenario at some future time is something like this;

Robots, Automation, brute optimization from data analysis, etc will result in less jobs available for unskilled laborers and many skilled blue collar workers. At some unknown time, it's possible that even skilled white collar workers could be pushed out.

The interesting thing - and we may already be seeing it - is this; Unemployment goes up, but there's no scarcity of product or labor in response.

At this point, there's a subtle disassociation between work done and money. In fact, money as a whole will become less useful, especially as some segment of the population that steadily grows larger over time has no way to generate any. Long term, this could be a very good thing - think Star Trek and a moneyless society where people more or less live a vacation lifestyle.

Short term however, we're going to have a period of serious strife, with haves and have-nots extremely separated, where money is still needed to buy food, make rent, and obtain material goods. How are we going to reach that tipping point into utopia when we have to first get through 20%, 40% or more unemployment - but we still rely on money? I don't even know if it's possible to get through that phase without some sort of civil war or revolution first that sets up all back to zero.

Even if we do get through it, what happens when that discrepancy still exists elsewhere in the world? Some nation is going to get there first, even if it's only by hours, but the whole world won't suddenly switch on at once. If we achieve post-scarcity by forcing third world nations to bear the burden, how long will that really last?

Personally, I think that we'll come up with some other metric to judge individuals long before money and majority unemployment are real issues. We just can't stand to not place metrics of value on individuals. I also think that none of this will happen in my lifetime, so really, this is just a thought experiment.

What do you expect from a bunch of analysts who have never run an actual shop? they're only about selling their research and access to their magic quadrant charts so naive CEOs and boards looking for answers can grasp at them for a strategy.

Actually that kind of emphasizes the point. Where you had Kodak, Polaroid, etc, actively employing hundreds of thousands, those same people are not necessary to manufacture a multi-tasking smart phone, and nothing else has developed to utilize those idle workers in the meantime.

It's easy to ignore the issue and shout "LUDDITES!" but sometimes you have to look at a problem actively rather than wait for it to self correct, as the self correction can be messier than the fix. An uncontrolled, unregulated, unch

Neo-Luddites are like Neo-Malthusians... inevitably right in the end, wrong until they are.

Consumption keeping pace with productivity is what has kept the luddites in the wrong for so long. I think the west has hit peak consumption though, for various reasons (part of which is that the Malthusians are also getting close to being right).